Economy 09:51 22/09/2014

‘World in indefinite depression’

We are in global depression which started in 2007 and is going to continue indefinitely, Jim Rickards, economist and author of “Currency Wars: The Making of the Next Global Crisis,” told RT.

China’s central bank is injecting a combined 500 billion Yuan into the country’s top banks – a move signaling the deep concerns of an economic slowdown in China. A downturn in China’s economy, as investment is scaled back in Chinese real estate, has prompted economists to forecast further financial defaults and slowing economic growth in the second half of the year. Will this monetary easing fix China’s short-term problem and put it back on the path to prosperity in the long-term? Erin from “Boom Bust” asked economist, Jim Rickards, in her show.

RT: The Chinese Central bank is now offering stimulus. Is this a part of a new round of “currency wars”?

Jim Rickards: Yes, that is right. I think this is one long “currency war”. We are now getting into more of a battle, more of a confrontation. The US dollar is the only strong currency that cannot last: the US cannot have a strong currency, because we are desperate for inflation. We have done all the quantitative easing, we have raised the zero, we have issued further guidance, we have done a twist, and we have done tree versions of QE. We have done everything possible. The only thing left is to try to cheapen the currency and in fact the dollar is getting stronger. The Fed might not have minded a stronger dollar. Six months ago it did look like the economy was getting stronger. We saw strong second quarter GDP. So it was a little bit of a good day. And Europe was desperate for the help: they were stepping into recession. Japan`s economy collapsed in the second quarter. So you could see the feds saying “ok…we will have a stronger dollar and give Europe and Japan a break”. But that is over. Now the US is becoming a loser and we are the ones who need to take a break. The only way to get it is a cheaper dollar. I would look for that in the months ahead.

RT: PIMCO says that Chinese growth will slow to 6.5% over the next year and this is despite the official 7.5% target now in place. Do you think PIMCO is right?

JR: Yes, it is about to go down further. I have been going for Chinese growth to get to 3 or 4%. I would say that China’s growth is already at 4%. I know they print 7.5%. But about half of the GDP they produce is wasted. So if I build a $5 billion train station in a small town that is $5 billion of GDP- this money is completely wasted because 10 people getting on the train are not going to pay for a $5 billion station. So you go around China with these ghost cities we have talked about before... So it is generating GDP, but it is completely wasted. If you adjusted the published GDP figures for the amount of waste, their actual growth is probably already roughly 4%. That is going to go lower.

RT: China is slowing the other BRICS, except for India is slowing, and Europe is slowing. Who is going to pick up the slack?

JR: Nobody, we are in a depression. This is a global depression. It started in 2007 and it is going to continue indefinitely. Depressions are structural, monetary solutions are cyclical: you cannot solve a structural problem with a cyclical remedy - monetary policy will not work. What it could do eventually is cause inflation. So far people say: “Where is the inflation?...We printed trillions of dollars, there is no inflation”. That is because we would have had deflation, extreme deflation, but for the money printing. It did produce inflation to the extent that it offset the deflation… The world is in depression, we are not getting out of it.

RT: In the last year or so we haven’t seen any notable economic crises in North America or in Europe. So are the pressures building towards another crisis, and if so where? Is it just globally?

JR: It will erupt somewhere, it will emerge somewhere but it will spread globally. I think there are a couple of candidates. One is obviously US stocks, that is a bubble. Maybe China is more likely. We talked about China`s economy slowing down- that is the case. The worst case is that the credit bubble collapses. Chinese savers – you know they are a wealthy country - they credit a lot of wealth. They don`t have many places to go. They can`t invest in foreign stocks, they don`t trust their own stock market… the banks pay them nothing. So they are putting all money in real estate and also wealth management products, these are structure products like CDO’s but they have real estate behind them. Their sponsors raise money in these funds; give you a wealth management certificate. And then they take money and put it into real estate. But the real estate is not producing, it is all speculation, it is all a bubble. That bubble will collapse… 



Source Panorama.am
Share |
Տեքստում սխալ կամ վրիպակ նկատելու դեպքում, ուղարկեք խմբագրին հաղորդագրություն` նշելով տվյալ սխալը, այնուհետև սեղմելով Ctrl-Enter:

Newsfeed

17:12
She said yes: Marriage proposal at Hayat Project concert in Gyumri
A young man proposed to his beloved at a Hayat Project concert in Gyumri, Armenia’s second largest city. In a video posted online, the...
16:45
Opposition MP slams Pashinyan's Artsakh statements
Opposition Hayastan faction MP Ishkhan Saghatelyan has expressed support to the Artsakh government in exile following Armenian Prime Minister...
16:04
MP Aghvan Vardanyan visits arrested activists
MP Aghvan Vardanyan, who represents the opposition Hayastan faction, on Thursday visited the Armavir Penitentiary where activists Vazgen...
15:36
Armenian opposition MP visits border villages
Opposition MP Tigran Abrahamyan has visited the villages of Voskepar and Baghanis in Tavush Province adjacent to the border areas demanded by...
15:04
Ex-Yerevan mayor setting up new party
Former Yerevan Mayor Hayk Marutyan is setting up a new party in the near future, his team has confirmed to RFE/RL’s Armenian Service....
14:36
Armenia to send 29.94 tons of humanitarian aid to Gaza
Armenia will deliver 29.94 tons of humanitarian aid to Gaza ravaged by the conflict with Israel. The decision was approved at a cabinet...
14:07
Expert: Pashinyan decided to terrorize Artsakh leaders
Political analyst Suren Surenyants has criticized Prime Minister Nikol Pashinyan’s statements on Artsakh leaders at a cabinet meeting on...
13:35
Analyst: The West doesn't care about Armenia
The West wants Armenia and Azerbaijan to sign a peace treaty as soon as possible and Armenia's territorial losses do not matter to it,...
13:06
Moscow concerned over anti-Russian bias of Armenia-EU-US meeting
The Armenia-EU-US meeting scheduled for April 5 is causing Moscow’s concern as Washington and Brussels are openly discussing its...
12:37
Pashinyan: Some circles displaced from Karabakh take actions threatening Armenia's security
Prime Minister Nikol Pashinyan warns that the actions taken by “some circles” forcibly displaced from Nagorno-Karabakh (Artsakh)...
12:04
Artsakh dissolution decree was 'the only way' to save people, president says
President Samvel Shahramanyan claims his decree ordering the dissolution of the Artsakh (Nagorno-Karabakh) Republic was the “only...
11:30
Japanese supplement products recalled after two deaths and over 100 people hospitalized
Health supplement products believed to have caused two deaths and sickened more than 100 people have been ordered to be taken off store shelves...
11:15
Today is Holy Thursday
The week leading up to Easter or Holy Resurrection is called Holy Week (in Armenian Avak Shabat). During this period, the Armenian Apostolic...
11:00
Upcoming Armenia-US-EU meeting not directed against any third party – Foreign Ministry
The high-level meeting scheduled for April 5 in Brussels is aimed at strengthening Armenia-EU-US cooperation and is not directed against...
17:00
Azerbaijan's team opts out of Sambo World Cup in Yerevan
Azerbaijan's national team will not participate in the Sambo World Cup to be held in Yerevan, Armenia, Azerbaijani Sambo Federation official...
16:45
Biden calls Putin 'butcher'
US President Joe Biden has disparaged his Russian counterpart Vladimir Putin for the second time in two months, publicly calling him a...
16:30
Armenian parliament speaker defends land handover to Azerbaijan
Armenian National Assembly Speaker Alen Simonyan has defended the plans to hand over border villages in Tavush Province to Azerbaijan. He...
16:04
Azerbaijan must create conditions for safe return of Armenians to Nagorno-Karabakh, UK says
The UK government is clear that Azerbaijan must create the conditions for a safe and secure return of ethnic Armenians who were displaced from...
15:35
Photo campaign calls for release of political prisoners in Armenia
A photo campaign for the release of Armenian opposition activists has been launched in Yerevan. Photos of political prisoners Narek...
15:15
Arthur Abraham's father dies at 68
German-Armenian boxing star Arthur Abraham’s father, Grigor Abrahamyan, has died in Berlin at the age of 68. “We’re deeply...
15:00
Armenian MP warns of threats after possible land handover to Azerbaijan
Opposition MP Tigran Abrahamyan has warned of threats to a number of settlements in Armenia amid Prime Minister Nikol Pashinyan’s signaled...
14:31
EU mission hosts French ambassador to Armenia
The EU Mission in Armenia (EUMA) on Wednesday hosted French Ambassador to Armenia Olivier Decottignies and members of the French...
14:06
Azerbaijan opposes Armenia-EU-US conference
The Azerbaijani Foreign Ministry has deplored the EU-Armenia-US joint conference scheduled for 5 April, warning that it will create...
13:36
Political prisoner Vazgen Saghatelyan slams Pashinyan in letter from prison
Political prisoner Vazgen Saghatelyan has blasted Armenian Prime Minister Nikol Pashinyan and his regime for efforts to silence their critics in...
12:34
U.S. aims to encourage Armenia and Azerbaijan to bridge differences – State Dept.
The objective of the United States is to encourage Armenia and Azerbaijan to bridge their differences, U.S. State Department...
12:15
Ukraine tells EU to hand over 'missing' €5B in Russian asset profits
Ukraine is pushing for another €5 billion from the proceeds generated by frozen Russian assets that the EU has decided to withhold from the...
12:00
Eurovision 2024: Semi-final running orders revealed
The running orders of the Eurovision Song Contest 2024 semi-finals have been revealed. Armenia’s Ladaniva will perform 8th in the...
11:45
Today marks Holy Wednesday
The week leading up to Easter or Holy Resurrection is called Holy Week (in Armenian Avak Shabat). During this period, the Armenian Apostolic...
11:30
Denialists Erdogan and Netanyahu shamefully exploit the term genocide to bash each other
By Harut Sassounian www.thecaliforniacourier.com For several decades, Israel and Turkey were in a honeymoon, supporting each other...
11:10
SME loan portfolio of Ameriabank reported more than 30% growth in 2023
The small and medium enterprise (SME) loan portfolio of Ameriabank increased by more than 30% in 2023 to reach to AMD 222.6 billion as of...

Follow us and get updates!

Most popular articles

{"core.blocks.header.spell_message1":"Selected mistake: ","core.blocks.header.spell_message2":"Send a message about the mistake?"}